ALTERNATIVES TO FORECLOSURE

Alternatives to Foreclosure

Do nothing and the worst will happen, you will most likely lose your home to a bank foreclosure auction. This will likely remain on your credit report for 7 years and you will not be able to enter into the real estate market in the near future.

Refinance: This can only happen if you still have equity in your home. You will have to completely pay off the current loan plus any late fees and taxes and qualify for a new one. Usually, this is accomplished through a refinance of the debt.

Reinstatement: Repayment of any past due mortgage amounts, late fees, taxes and legal costs that occurred.

Loan Modification: asking the existing mortgage company to refinance the debt or extend the terms of the loan. To qualify, you must prove to the lender you have fixed the problems that caused any late payments. You will also need to re-qualify for the mortgage. This option rarely results in a reduction in the principle balance of your mortgage.

Forbearance: This is often a way to give the homeowner some time to catch up on what is still owed by making payments until the delinquent payments are made up. Sometimes the delinquent amount due is added onto the back end of the loan. Information will be required from the lender to show that you are able to meet the new payment plan requirements.

Partial Claims: A loan from the lender for a 2nd loan to include back payments, costs and fees.

Deed in Lieu of Foreclosure: Give the property back to the bank instead of the bank foreclosing. Banks generally require the home to be well maintained, all mortgage payments and taxes must be current. Most loan applications ask if this has ever happened as it is typically viewed and reported as foreclosure

Bankruptcy: To liquidate all debt Chapter 7 (liquidation) Chapter 13 is used to completely settle personal debt. (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years. Chapter 11 (Business Reorganization) A business debt solution.

Regular Sale: A regular sale is only an option when there is enough equity left in the house to pay all loans off plus closing costs. What is left over the home owner gets to keep.

Short Sale: Has to be negotiated with your lender also called a pre-foreclosure sale. An experienced Short Sale Specialist Real Estate Professional can help you with navigating through all the details and determine if you are qualified for a short sale. A short sale is what is owed is MORE than the property’s value.